As has become an American tradition as ensconced as the Thanksgiving turkey, shoppers formed long queues in front of retail stores yesterday, with some even camping out, ahead of the doors opening for the Black Friday sales, which once again began on a Thursday.

J.C. Penney (JCP) and Macy's (M) opened on Thanksgiving for the first time, while Kmart (SHLD), Old Navy (GPS) and Lord & Taylor opened in the morning.

The National Retail Federation has forecast that up to 140M consumers will go shopping over the long weekend, up a bit from 139.4M last year. IBISWorld has projected that total sales through Cyber Monday will rise 2.2% to $40.5B.

Mobile traffic increased over 31% yesterday as smartphones accounted for more than 23% of all Internet traffic. By 6 pm, online sales were up 10% over last year.

To keep the crowds calm, Wal-Mart (WMT) handed out wristbands, Best Buy (BBY) used a ticketing system, and Target (TGT) had security staff ride segways in the parking lots to increase their visibility.

E-commerce sales this holiday season will rise 14% to 17% this year to top the marks of the last three years, forecasts Jefferies. Cyber Monday sales are tapped to see +20% Y/Y sales growth.

The ongoing channel shift away from brick-and-mortar becomes even more pronounced when auto, restaurants, and gas are backed out of retail sales tallies. Apparel sellers are forecast to be the hardest hit, although on-trend names such as Under Armour (UA), Macy's (M), Gap (GPS), and Lululemon (LULU) should outperform.

There's plenty of economic data to mull over, but Treasurys are taking their cue from an unexpected decline in Consumer Confidence in November - this despite (or because of) the government returning to work and a stock market that won't quit. Those with good memories will remember the big drop in October was attributed to the government shutdown and chatter about default.

The Expectations Index also declined - to 69.3 from 72.2.

"With such uncertainty prevailing, this could be a challenging holiday season for retailers," says The Conference Board's Lynn Franco.

TLT+0.4%, TBT-0.8%, and the 10-year Treasury yield is off 3 bps to 2.70%.

Consumers who think they'll be getting huge discounts on Black Friday might want to think again. In the words of the WSJ's Suzanne Kapner, "those bargains will be a carefully engineered illusion."

Retailers and suppliers first work out the lowest price they can sell a product at and still make the profit they want, and then they jack up the "suggested retail price" so that the retailer can later offer a big discount.

Another tactic is for stores to raise selling prices just before the holiday season discount period kicks in.

"The U.S. economy might be limping along, but many consumers have broken into a sprint," Jacqueline Doherty writes, in what seems like a rather paradoxical passage considering that consumer spending accounts for around two-thirds of U.S. economic output.

Doherty cites an October retail sales print that came in ahead of consensus, NRF's expectations for a healthy Y/Y increase in holiday sales, and a hefty, market-beating return for the S&P Retail Select Industry index as evidence of "improvements in the consumer's fortunes."

Still, Barron's thinks some stocks, like Michael Kors (KORS) and Restoration Hardware (RH), may have limited upside after big runs.

Multiple expansion was behind stock gains this year, but next year it'll have to be earnings and money flow rather than further valuation re-rating, says Goldman's David Kostin, reiterating his cautious 1,900 end-of-2014 target for the S&P 500 (SPY).

Margins are key, and Goldman's forecast is the "greatest investable gap relative to consensus expectations.” The bank expects 8.9% in 2014 and 9% in 2015 vs. the Street at 9.5% and 10.1%, respectively. Every 50 basis point swing in margins translates into a swing of about $5 per share in EPS.

Four recommended strategies: Pick growth (IWF) over value (IWD), firms investing in capex, companies with high buyback yields (seems contradictory with previous), and stocks with high operating leverage.

The mutual fund giant greatly boosts its ETF presence, rolling out 10 sector ETFs on Thursday, with BlackRock (BLK) - whose iShares has its own suite of sector ETFs - as the funds' sub-advisor. State Street (STT), though, is better-known for its sector offerings. Launching on Thursday - and popular existing State Street SPDR ETFs they'll be competing with:

It's a good year for large-cap core mutual funds, with 46% beating the S&P 500 vs. a 10-year average of just 36%, according to Goldman Sachs.

The study finds most are overweight health care (XLV), which not coincidentally happens to be the best-performing sector this year, up 30%.

The funds are most underweight utilities (XLU), which just happen to be the second worst-performing sector YTD, up 10%. Only telecoms have done worse.

Chasing performance? May be, but the team finds the funds have tended to be present in the good performers for the last 12 months, and have retreated from discretionary stocks (XLY) of late despite their outperformance.

Individual names? CVS Caremark (CVS), JPMorgan (JPM), and Cisco (CSCO) are the stocks liked the most vs. the benchmark.

J.C. Penney (JCP), Wolverine World Wide (WWW) and Humana (HUM), for example, all warned this week of potential bottom-line consequences of federal furloughs and agency closures; corporate M&A plans also appear to be on hold as executives await a return to normal.

Every week the government is closed trims economic output by ~$1.6B, or 0.16 percentage point for the quarter, according to research firm IHS, and "if the shutdown drags on, the effects will start to add up."

The last fight, in 1995-96, impacted consumer confidence; with the year-end shopping season approaching, that's critical, especially for retailers.

The National Retail Federation expects sales during the November-December holiday shopping period to increase 3.9% to $602.1B, with growth accelerating from 3.5% last year. However, says the NRF, a prolonged government shutdown could hurt consumer sentiment and harm sales.

Boeing (BA) has warned that deliveries of some jets could be postponed, as the FAA officials who need to approve the planes before they're handed over to customers have been furloughed. Airbus has already delayed the delivery of an A321 to JetBlue.

The closure is hurting small businesses that rely on federal agencies to operate or that were trying to secure government-backed loans.

The market's more richly valued than you think, writes Jack Hough in Barron's, as Q4 S&P 500 (SPY) earnings are expected to rise 10.5% on just a 0.6% increase in revenue. "Where's that margin growth going to come from," asks S&P's Howard Silverblatt. "Most of us aren't exactly napping on the job as it is."

A stock screen scoring companies by free cash yield as well as ability to still boost margins yields 5 top picks:

Pfizer (PFE) trades inline with a slow-grower like Merck (MRK) but maybe deserves a multiple closer to a fast-grower like Bristol-Myers Squibb (BMY).

Danaher (DHR) - it trades at what seems like a pricey 18x earnings, but just 15x projected free cash.

Lear (LEA) at 10x earnings is growing faster than the auto market as a whole as it picks up market share and electrical content in cars is rising.

Oracle (ORCL) and Qualcomm (QCOM) have both seen earnings growing faster than their share price of late, leaving them attractively priced.

The screen also yielded 3 to avoid:

Tiffany (TIF) at 20x earnings is pricing in faster earnings growth in 2014. Praxair (PX) expectations are for a near-doubling in earnings growth to 13%. Lennar (LEN) with 32% projected earnings growth remains pricey even as the housing recovery appears to be slowing.

Merrill Lynch analyst Savita Subramanian cut consumer discretionary stocks to Underperform on her view the sector is greatly overvalued. Margins are stretched to the limit and rising interest rates are creating some savers out of spenders, she notes.

Warnings signs of a cautious stance by U.S. consumers have been popping over the last weeks from teenage retailers to restaurants, but the unexpected strength in the automobile market has largely muted the argument. It took Wal-Mart dipping into negative comp sales growth to swing the pendulum on Wall Street in force.

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